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Last Updated: Sunday, 13 August 2006, 15:57 GMT 16:57 UK
Norway's future Arctic oil bonanza
By Lars Bevanger
BBC News, Hammerfest, Norway

As the world's known oil and gas reserves are running out, the hunt for more is on, and in even more remote places on earth.

Tanker at Snow White in the Barents Sea
Norway plans to ship liquefied natural gas to the US

One such area is the Barents Sea, off the northernmost tip of Norway and neighbouring Russia.

Both Norwegian and Russian authorities say the potential for future fossil energy exploration here is enormous, while environmentalists warn of the danger to the fragile Arctic environment.

From reindeer to gas

In Norway's northernmost town, Hammerfest, reindeer often roam the streets.

Along with reindeer farming, fishing has long been the economic mainstay for this high Arctic region.

But now a new and very high-tech industry is rising out of this barren and forbidding landscape.

Fisherman Arnulf Bertheusen
Oil won't last forever, while fish is a renewable resource
Fisherman Arnulf Bertheusen

At Melkoeya, an island just across from Hammerfest's fishing port, a gigantic gas plant dwarves the town proper.

It is linked with the Snohvit, or Snow White, development, and here they will process liquefied natural gas - or LNG - from next year.

The gas is piped from sub-sea reservoirs some 140 km off the coastline, out in the Barents Sea.

The processed gas will be shipped to energy-hungry Americans.

The government says it is needed, because North Sea oil wells are drying out.

If Norway is to remain the world's third largest oil and gas exporter, experts say the high Arctic is the obvious place to go.

- Huge potential

Rune Rautio works for the Barents Secretariat, which co-ordinates development in the area.

He told BBC News that the potential for oil and gas in this region is huge.

"Then we are only talking about what is already discovered. We know that more than 22% of all known reserves of gas in the world are located in only one area in the north, in the Yamal peninsula, so that should give some indication."

Fishing boat in the Barents Sea
Local fishermen fear that fish stocks could be under threat

Arctic gas and oil exploration is not problem free, however.

The very harsh climate means considerable technological challenges.

And there is strong opposition from local fishermen, who say an oil spill would ruin fish spawning grounds.

Arnulf Bertheusen has been fishing in the Barents region for most of his life. He says he is worried about the Arctic cod, which is already under threat after years of over-fishing.

"If you get an oil spill, it could ruin an entire generation of cod, and that would be catastrophic," he says.

"And oil won't last forever, while fish is a renewable resource - I think everybody agrees on that."

Most environmentalists here agree with the fishermen.

They say the fragile nature of the high Arctic cannot take any more pollution.

But most of Hammerfest's people welcome a new oil era.

They have already seen that new big industrial developments like the Snow White plant bring plenty of new jobs.

One of those who now work at the plant is Gunnar Bolle.

He is not surprised most people in Hammerfest are happy with the development.

"Earlier we had a lot of fish factories here. But those production lines have been moved to France. And of course you can't stop the development, you have to look forward all the time", Mr Bolle told BBC News.


The future of the Barents Sea is also geopolitically important. During the cold war, this area was strategically crucial, with Nato and Soviet submarines patrolling the same area.

Snow White in the Barents Sea
The oil and gas installations bring jobs to the North

Today, the biggest gas reserves lie on the Russian side of the border.

But this time the Russians are looking west for co-operation rather than conflict.

Norway is considered to be a world leader in off-shore technology, after more than 30 years of challenging North Sea oil exploration.

This is technology which Russia needs, says Rune Rautio of the Barents Secretariat.

"The Russians do not have any [of that] knowledge, because traditionally they have been doing drilling and production on-shore."

Norway's main energy companies Statoil and Norsk Hydro are among five firms shortlisted to help develop Russia's enormous Shtokman gas field in the eastern Barents Sea.

The promised Arctic energy bonanza is still in its infancy, and for now the solitude and emptiness of this part of Norway remains its most striking feature.

But out in the sea here, they are already drilling for more oil and gas.

If they strike lucky, this far-away part of Norway could change forever.

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